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World Bank Describes Global Growth This Year as 'Disappointing'

Global growth had been “disappointing” this year, according to World Bank president Dr Jim Yong Kim, who counted Europe's woes, reforms in Japan, and the impact of U.S. monetary policy on emerging markets, among the world's greatest economic challenges.

Speaking in Sydney en route to the G20 finance ministers' meeting in Cairns at the weekend, Dr Kim said there was still a lot of uncertainty and geopolitical risk holding back Europe's recovery, while emerging market growth had slowed as U.S. preparations for lifting interest rates drew capital away from countries such as Brazil.

“At one point our projections were as high as 3.2% for growth globally, and now they're around 2.7%,” he said.

On Europe, however, he was encouraged by progress in some Mediterranean countries, although he warned that any escalation in the Ukraine crisis would set back broader recovery.

“So far the impact of that crisis has been at the lower end of what our expectations are, but if it gets worse, if the tensions get worse, the impact could be much, much bigger.”

The World Bank president will this weekend join the world's most powerful central bank governors and finance ministers in Cairns for a series of economic meetings. It will be one of their last chances to discuss as a group the main problems afflicting the global economy before the G 20 Brisbane summit.

Australia's Finance minister Joe Hockey and host of the meeting has set a 2% growth target for the group of countries.

“At this meeting we're going to sit down and say, 'OK, if we want 2% growth, here are all the things that G20 members have to do to get there',” Dr Kim said. ”The International Monetary Fund (IMF) and the Organisation for Economic Development have suggested that we're at about 1.6% growth. So there's still more work to do.“

Mr Hockey has been in Cairns for much of the week, meeting with Bank of England governor Mark Carney and IMF chief executive Christine Lagarde. The official meetings will start on Saturday.

The Australian minister anticipated that he wants the official meetings with G20 finance ministers and central bank governors to focus on tax.

”Hopefully this weekend, G20 finance ministers will sign up to an agreed global approach to ensure that companies pay tax where they earn the money,“ he said this week. ”It's not an easy outcome, but we are going to work damn hard at it.”

He also wanted to talk seriously about the stability of the global financial system, including the rules for banking and prudential supervision of financial markets.